News September 2015

Hinkley

This week Chancellor George Osborne told Parliament that the power from the planned Hinkley C nuclear plant would be cheaper than onshore wind, writes Doug Parr. That could be true on Planet Zog – but here on Earth the reverse is the case. Exactly what are Osborne and his Treasury mandarins smoking? There is an increased air of unreality about what is going on in UK Government on energy policy, and what is visible to the rest of the real world. Nowhere is this clearer than their continued bullishness on the proposed Hinkley Point nuclear power station. On the one hand, earlier today the Financial Times joined environmental campaigners in saying that the project should be abandoned. That’s become almost normal, given that the energy minister who last gave the go ahead to new nuclear power in the UK (David Howell, now Lord Howell) has withdrawn his support. But the reason the Financial Times offers for its view is interesting, as they argue that “the cost of alternative low carbon sources, such as solar, and better battery technology, is falling fast.” The UK’s Chancellor George Osborne in stark contrast claimed that the country’s first new nuclear power station is the cheapest form of low-carbon generation available – cheaper even than onshore wind.

Hinkley

UK should think again about Hinkley Point nuclear power station: The economics of EDF’s project looks less and less desirable. EDF may have signed an outline agreement with the government in 2013. But last week it announced the plant would not come on line in 2023 as planned. That is because the group has yet to agree a final deal with its Chinese partners on the split of their investment. The government should seize the chance offered by this pause to look at the whole misconceived project again.Cash-strapped EDF may find it challenging to finance its side of the bargain. But from the perspective of the UK consumer the terms look even less desirable. Few would bet on wholesale electricity prices holding steady at double their present level for the next half century. Some experts even hypothesise that they might fall, both magnifying the scale of the subsidies and making them permanent. Meanwhile the cost of alternative low carbon sources, such as solar, and better battery technology, is falling fast.Any sensible nuclear strategy must surely involve proven technology and reasonable costs. EDF offers neither. The two EPR reactors it is building in Europe have suffered huge cost overruns and delays. The group has spent £2bn on Hinkley Point before a brick has been laid. Granted, the government says that the French group and its partners will bear responsibility for any overruns. But this promise may yet be tested. Some of the debt to finance construction will bear a government guarantee. Before finally signing on the dotted line, ministers should take a fresh look at the underlying assumptions for the project in the light of changing circumstances, then publish and defend them. If the economics does not make sense, it should consider scrapping the deal and retendering it, this time on a properly competitive basis and with more stringent criteria. Backing out of Hinkley Point might upset the French and embarrass the government. But a wish to spare ministerial blushes is no excuse for saddling the country with costs it cannot afford.

Hinkley

George Osborne has rejected accusations from a former head of the civil service that his plans for a new nuclear power station at Hinkley Point in Somerset would create a “big white elephant” and a “bottomless pit”. At a grilling of the Chancellor by the House of Lords’ Economic Affairs Committee, Lord Turnbull – who was Cabinet Secretary between 2002 and 2005 – pointed out that since the coalition government struck a deal in 2013 with EDF and Chinese investors to build the UK’s first new nuclear plant in two decades, the price of oil had collapsed and the French energy company had run into serious technical problems with its reactor design. “Shouldn’t we really go back to the drawing board, rather than plumping for what I think will be a kind of bottomless pit and a big white elephant?” Lord Turnbull, who was also Permanent Secretary to the Treasury between 1998 and 2002, suggested that the Government ought to use gas as an interim source of energy while the problems of nuclear were addressed.

New Nukes

Andy Stirling and Philip Johnstone (SPRU): The starkly differing nuclear policies of Germany and the UK present perhaps the clearest divergence in developed world energy strategies. Under the current major Energy Transition (Energiewende), Germany is seeking to entirely phase out nuclear power by 2022. Yet the UK has for many years advocated a “nuclear renaissance”, promoting the most ambitious new nuclear construction programme in Western Europe. A close look at what’s happening makes the contrast look very odd indeed. Nowhere is that difference more obvious than in the impending decision of British energy minister Amber Rudd, over arguably the most expensive single infrastructure project in British history: the Hinkley Point C power station. Both nuclear and renewables offer low carbon strategies. But the performance of renewable energy is now manifestly superior to nuclear power and continuing to improve. The position of nuclear power, by contrast, is rapidly declining worldwide. In 2013, new global investments in renewable electricity capacity overtook those in all fossil fuels combined. So, why does UK policy making and public debate on these issues remain so distinctively biased towards nuclear? It is extraordinarily difficult to understand why Germany rather than the UK should be moving away from nuclear power, without being drawn to the relative qualities of democracy in the two countries. Whether this is right or wrong, it is very significant that it is Germany that has been able to mount an effective challenge to the concentrated power and entrenched interests around nuclear energy. Also perhaps relevant, is the fact that Germany has a track record of consistently making these kinds of enlightened decision earlier than the UK (on issues like acid rain, pesticides, recycling and clean production) – whilst remaining arguably the world’s most successful industrial economy. So the practical message seems quite profound. General British debates over directions for innovation – around nuclear energy as in other areas like GMOs – are presently not primarily seen as matters for democracy; in effect they are not deemed suitable for public debate. Yet the troubled history of nuclear power itself – as with other technological issues like asbestos, phthalidomide and chemical pollution – shows how accountabilities neglected earlier, have a habit of being strongly asserted later. Perhaps this is something Amber Rudd might bear in mind, when making her impending momentous decision on Hinkley Point.

Bradwell

The government is close to finalising a deal that will allow Chinese state-owned companies to build and operate a nuclear reactor in Essex. EDF told investors last week that it expected to conclude an agreement with Britain to build a new nuclear power plant at Hinkley Point, Somerset, with two junior Chinese backers. However, the controversial and much-delayed project is only the first in a package of deals between the UK, EDF and the French energy group’s partners China General Nuclear Power Group and China National Nuclear Corporation. Second in the sequence is a new reactor at Sizewell, Suffolk, which will be followed by a plant at Bradwell, Essex.

Bradwell

DAVID CAMERON is set to sign a landmark deal next month to allow China to build a prototype nuclear reactor in Bradwell, Essex. The plant would be the first Chinese-designed and operated facility in the West. It is the price Beijing has extracted in return for its agreement to help pay for two new plants to be built by France’s EDF Energy — one at Hinkley Point in Somerset and the other at Sizewell, Suffolk. The deal, part of a wide-ranging civil nuclear pact between Britain, France and China, may be sealed in October during the Chinese president’s state visit. Last week EDF admitted that Hinkley Point, Britain’s first atomic power station in two decades, will be hit with fresh delays. It was originally scheduled to open in 2017, but wrangling over how it will be funded has held up the start of work. Problems with the EPR reactor design have also stymied progress, and the company admitted last week it would not open before 2024. Whitehall officials are hammering out the final details of an agreement under which two of Beijing’s state power companies, China General Nuclear and China National Nuclear Corporation, will take a large minority stake in Hinkley Point. They would also be junior partners, and cover part of the costs, for a follow-on plant at Sizewell. EDF would lead the construction and operation of both sites. In return for Beijing’s support on those plants, EDF would sell its rights to a development site it owns at Bradwell. The French would become a minority partner and assist the Chinese through Britain’s approval process for a new reactor design, a process that is among the most arduous in the world. Beijing would then use that certification as a selling point as it bids to become the world leader in nuclear technology. The Chinese design is expected to be capable of producing one gigawatt of electricity — enough to power 1m homes.

Hinkley

EDF has indefinitely postponed its Hinkley C nuclear plant in Somerset, England, as a new IEA analysis shows that its power will cost UK energy users three times more than it should, writes Oliver Tickell. A similar reactor in France is running six years late and three times over budget – and may never be completed.

Hinkley/Flamanville

French energy giant EDF has admitted that the construction of Britain’s first new nuclear power plant in decades has been delayed, despite yesterday it being claimed no delays were going to happen. EDF has been struggling to finance the plant but hoped to announce Chinese funding when China’s Premier Xi Jinping comes to London next month. Fears have been building about a possible delay to the plant after China’s markets crashed last month. The news on Hinkley Point comes as a report shows projected nuclear costs in the UK are the highest in the world. An OECD survey found that the costs are almost three times above those in countries such as China and Korea.

Moorside

Energy Minister Andrea Leadsom visited Cumbria today to holds talks about nuclear new build at Sellafield. She met representatives of businesses and the education and training sector in Carlisle, at a meeting organised by MP John Stevenson to address concerns around skills shortages. Then she went to Sellafield and was due to visit Moorside on Thursday where NuGen is planning to build a nuclear power plant. If the £10bn project goes ahead, it will be the largest private sector investment west Cumbria has ever seen. Up to 6,000 people will be working on the site at any one time. Mrs Leadsom said: “It was one of my key priorities to come here and see for myself Sellafield and the potential of Moorside. Nuclear is a key part of our clean energy agenda.” She said the Government wanted to work with partners in Cumbria to ensure that workers with the necessary skills were in place, and that the county’s infrastructure was ready to handle such a large project.

Hinkley

Allan Jeffery: As the Hinkley Point C construction site has been mothballed, and put into a state of care and maintenance, until a final investment decision is made, is this the beginning of the end for this disastrous project? Whether this Hinkley project goes ahead, or not, is not in the hands of local MP, Ian Liddle Grainger, nor local Somerset councillors or even the British and French governments. The deciding factor will be if anybody is crazy enough to invest the vast sums of money required to build what is probably the most expensive building project in the world. Areva, the state-owned nuclear company, was originally going to supply 10% of the costs but is now in dire financial straits. EDF, the main French state owned nuclear company was supposed to be investing between 30/40 % of the Hinkley costs, but now has to absorb the debts of Areva, and is not in a strong financial position.So who will invest the other 2/3 of the investment, China? Will the Chinese take on a massive risky investment in a reactor that the rest of the world does not want? Should we allow China to play major part in our nuclear industry?

Gov thinking seems to have finally caught up with reality - main question is not how best to make the taxpayer cough up for new nuclear. No justification for spending our money on outdated technology when renewables cheaper, quicker to build and cleaner.
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